News / Economy

US Anti-Corruption Law Snags Major Tech Company

FILE-This Tuesday, Aug. 21, 2012, file photo, shows an exterior view of Hewlett Packard Co.'s headquarters in Palo Alto, California.
FILE-This Tuesday, Aug. 21, 2012, file photo, shows an exterior view of Hewlett Packard Co.'s headquarters in Palo Alto, California.
Earlier this month, the U.S. technology company Hewlett Packard agreed to plead guilty to bribery charges involving its Russian, Polish, and Mexican subsidiaries. 
 
Hewlett Packard admitted to the U.S. Department of Justice that it bribed Russian officials in hopes of landing a lucrative contract with Moscow’s Office of the Prosecutor General.  In Poland, HP admitted to bribery connected to contracts with the national police agency, while in Mexico, the illicit cash was tied to deals with Pemex, the state oil company.
 
What snared Palo Alto, California-based “HP” is the Foreign Corrupt Practices Act (FCPA), a groundbreaking law enacted nearly four decades ago.
 
HP’s agreement to pay US$108 million in both criminal and civil penalties is the tenth largest settlement ever under the FCPA. Other corporations that have been caught in FCPA’s net include Walmart, Halliburton, KBR, Siemens, BAE Systems, and Daimler AG.
 
Julie DiMauro, Executive Editor of the anti-corruption FCPA Blog, describes the impact upon HP for getting caught.  “The penalty amount,” she says, “might not be the true deterrent here. What could be, to it and other companies, is the ample negative publicity it is getting for its actions in multiple countries.”
 
The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter in December, 1977. It was enacted in the wake of a U.S Securities and Exchange investigation that found more than 400 U.S. corporations had collectively paid more than $300 million in bribes to foreign officials and political parties. 
 
“The passage of the FCPA itself was revolutionary,” says Sarah Pray at the good governance and accountability organization Open Society Foundations. “In an era when you could still deduct bribes from your taxes in some countries, the United States took a stand.”
 
The FCPA casts a broad shadow covering both corporations and individuals. Under the law’s provisions, anyone – regardless of nationality - is in violation of the law if they engage in bribery while in the United States.  That denies legal haven to foreigners engaging in corrupt activities offshore while in the U.S. The FCPA also applies to U.S. citizens’ financial actions overseas.  And, since 1997, it covers foreign corporations that are traded on U.S. stock exchanges and securities markets.
 
The FCPA also blocks the use of proxies to engage in illegalities.

“The FCPA’s third party liability provisions,” says Washington attorney and FCPA expert Lucinda Low, “makes it a crime to make a payment to any person, knowing that the payment or other value will be passed through in whole or in part of a foreign government official or other covered [by the FCPA] recipient.”
 
Interestingly, though, so-called facilitation or “grease” payments to foreign officials may be legal under FCPA, if done to expedite that official’s performance of duties.  And, payments to foreign officials may also be legal if the host country permits such activity.
 
Enacting the FCPA promoted a number of other nations to follow suit.   Britain passed the Bribery Act, while Canada enacted a similar law. Anti-corruption laws have been enacted in China, Thailand, Malaysia, Brazil, and many other countries. The United Nations has responded by enacting the U.N. Convention on Corruption, while the 40 state Organization for Economic Cooperation and Development (OECD) enacted, in 1997, an Anti-Bribery Convention, though the anti-corruption group Transparency International chides the OECD for not insisting its member states more aggressively enforce the provisions of that agreement.
 
While the FCPA has a broad reach, a former Justice Department FCPA prosecutor says it has a limitation – time – that needs to be changed. 

“I think there are statute of limitations issues [within the FCPA],” says Kathleen Hamann. ”A lot of complex economic crimes in the U.S. have a 10 year statute of limitations. But, the FCPA has a five year statute of limitations.” Hamann, now in private practice, adds”I think there are a lot of individuals who end up not being prosecuted because the statute of limitations has run out.” She says “I think we need to treat it [bribery and other crimes covered by FCPA] as what it is, a complex financial crime.”
 
Sarah Pray calls for the FCPA’s expansion in another direction.

“The United States should outlaw all commercial bribery, not just bribery of foreign officials. Secondly,” Pray adds, “the United States should outlaw ‘facilitation payments. The line between a bribe and a facilitation payment is a blurred one, and this distinction should be eliminated.”
 
Along with penalties for misbehavior, Lucinda Low says the FCPA has compelled the business world to become proactive. “FCPA”, she says, “created expectations that companies will institute internal programs and controls to prevent, detect, and remediate bribery and corruption throughout their organizations. “

Jeffrey Young

Jeffrey Young came to the “Corruption” beat after years of doing news analysis, primarily on global strategic issues such as nuclear proliferation.  During most of 2013, he was on special assignment in Baghdad and elsewhere with the Special Inspector General for Iraq Reconstruction (SIGIR).  Previous VOA activities include VOA-TV, where he created the “How America Works” and “How America Elects” series, and the “Focus” news analysis unit.

You May Like

Could Nemtsov Threaten Putin in Death as in Life?

Dynamic and debonair opposition leader had supported liberal economic reforms, criticized Russian president's aggression in Ukraine More

Oil Smuggling Highlights Challenges in Shutting Down IS Finances

Pentagon spokesman says Islamic State 'certainly continues to get revenue from the oil industry black market' but that airstrikes have made a dent More

India Focuses on Infrastructure, Investment to Propel Economy

Government expects economy to grow at 8 to 8.5 percent in next fiscal year More

This forum has been closed.
Comment Sorting
Comments
     
by: ed
April 24, 2014 10:52 PM
Julie DiMauro, Executive Editor of the anti-corruption FCPA Blog, describes the impact upon HP for getting caught. “The penalty amount,” she says, “might not be the true deterrent here. What could be, to it and other companies, is the ample negative publicity it is getting for its actions in multiple countries.”

Thanks Julie. Actually, the true deterrent here doesn't exist, which is likely by design if those evil companies bribed local officials too in order to have the law written in a way that wouldn't present a real threat. Until the public forces government to treat the Directors of Global Money Grab Inc like it does poor people and slams their crooked butts into a cage, it will continue to be business as usual for the Government Industrial Complex. Here no evil, see no evil, speak no evil.

by: Gervazio Degan from: Joao Pessoa, Brazil
April 21, 2014 10:22 AM
I don't understand because Brazil is not cited among the countries bribed.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Supreme Court Hears Hijab Discrimination Casei
X
Katherine Gypson
February 25, 2015 11:30 PM
The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video US Supreme Court Hears Hijab Discrimination Case

The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video Falling Gas Prices Hurt Nascent Illinois Hydraulic Fracturing Industry

Falling oil prices are helping consumers purchase cheaper petroleum at the pump. But that’s made hydraulic fracturing or “fracking” less economically viable for the companies in the United States invested in the process. VOA’s Kane Farabaugh reports on one Midwestern town that was hoping to change its fortunes by cashing in on the next big U.S. oil boom.
Video

Video Fighting in Sudan's South Kordofan Fuels Mass Displacement

Heavy fighting in Sudan's South Kordofan state is causing hundreds of thousands to flee into uncertain conditions. Local aid organizations estimate as many as 400,000 civilians have been internally displaced since the conflict began more than three years ago, while another 250,000 have fled across the border to refugee camps in South Sudan. VOA's Adam Bailes reports.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.
Video

Video A Filmmaker Discovers Her Biracial Identity in "Little White Lie

Lacey Schwartz grew up in an upper middle-class Jewish family, in a town in upstate New York where almost everyone she knew was white. She assumed that she was, as well. Her recent documentary, Little White Lie, tells the story of how she uncovered the secret of her true racial background. VOA’s Carolyn Weaver has more on the film.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video US-Cuba Normalization Talks Resume Friday

Negotiations aimed at normalizing diplomatic relations between the U.S. and Cuba resume Friday. On the table: lifting a half-century trade embargo and easing banking and travel restrictions. There's opposition in Congress, but some analysts say there may be sufficient political and economic incentives in both nations for a potential breakthrough this year. VOA's Mil Arcega reports.
Video

Video Pakistan's Deadline For SIM Registration Has Cellphone Users Scrambling

Pakistani cell phone users have until midnight Thursday to register their SIM cards, or their service will be cut off. While some privacy experts worry about government intrusion, many Pakistanis are just worried about keeping their phone lines open. VOA Deewa reporter Arshad Muhmand has more from Peshawar.
Video

Video Myanmar Warns Factory Workers to End Strikes

Outside Myanmar's main city Yangon, thousands of workers walked off their jobs earlier this month demanding a doubling of their wages, pay raises after a year and input from labor unions on industrial regulations. Since Friday, the standoff has grown more tense as police moved in to disrupt the sit-ins, resulting in clashes that injured people from both sides. VOA correspondent Steve Herman visited industrial zones which have become a focus of Myanmar's fledgling workers rights movement.
Video

Video Oscar Winners Do More Than Thank the Academy

The Academy Awards presentation is Hollywood’s night to reward the best movies from the previous year. It’s typically a lot of glitter, a lot of thank you’s, a lot of speeches. But many of this year’s speeches carried messages beyond the thank you's. VOA’s Carolyn Presutti takes a look.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.8896
JPY
USD
119.26
GBP
USD
0.6475
CAD
USD
1.2451
INR
USD
61.816

Rates may not be current.